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Cost Transfers

Cost Transfers: The transfer of a charge to or from an account which was previously recorded elsewhere. Cost transfers are usually used to correct errors and should be performed on a timely basis, should include proper documentation and should be approved by cognizant and authorized individuals. These individuals may include and are not limited to: the appropriate sponsor (depending on terms of contract or award), the PI, Dean, School Fiscal Officer, Vice President for Research, Provost, or President.

Cost Transfers can occur between
  • Two sponsored accounts
  • Department account to sponsored account
  • Sponsored accounted to department account
  • Two department accounts

Cost Transfers are problematic when the transfers are between two federal accounts and when the transfer clears a deficit off one of the federal projects; the transfer occurs more than 45 days after the original transaction, and transfers to a federal project at the end of the project period or after the project period.

The Office of Post-Award Management does not oversee transfers between department accounts.

The following are red flags to an auditor:

  • Volume of Cost Transfers
  • Cost Transfers that occur several months after the initial accounting transaction
  • Cost Transfers involving personnel expenses that occur after an Effort Certification report is complete
  • A pattern of Cost Transfers from a sponsored project.

However, since there are instances where a correction of a previously recorded cost is necessary, such transfers must occur on a timely basis. In addition to increased audit risk, the university may not be able to recover valid sponsored program expenses.

Cost transfers occurring after 45 days of the original transaction and/or exceeding five percent (5%) of the annual award, must be approved by the V.P. for Business Affairs. PeopleSoft will not process a transaction 45 days after the end date. Even if the transaction does benefit the grant, and should have been on the grant, the sponsor still has to approve the expense, and if approved, the sponsor will request a new final financial report from the Office of Finance.

For the above mentioned reasons, it is the university's policy to keep the number of Cost Transfers to a minimum.

Cost Transfers that are allowed:

  • Error correction
  • Transfers between cost accounts of the same grant
  • Costs benefiting more than one sponsored grant
  • Transfer of retroactive expenses due to a delay in finalizing the award or contract

The following are the 3 forms of Cost Transfers at UT-Dallas: a PAF, Journal Entry, and Auto Journal Entries.

The Human Resources Personnel Action Form (PAF)

A PAF is a physical form used to move salary expenditures from one account to another. This form initiates the transfer of the cost associated with an individual's Effort.

Cost transfers of Effort are to be created by the PI, or his/her designate, signed by an authorized signatory for the account, forwarded to the Office of Post-Award Management (OPM), to check compliance with this policy, and approval.

The PAFs are then sent on to Human Resources, Budget, and ultimately the Payroll department. PAFs that effect research grants and do not contain OPM's approval are not processed by Budget until that approval is obtained.

Journal Entries (formally known as Interdepartmental Transfers - IDTs)

This is an auditable transfer that enables authorized users to move revenue or expenses from one account to another.

It cannot be used for the following:

  • To revise the posted award budget
  • To transfer fund balance
  • To transfer salaries and benefits
  • To transfer encumbrances

Journal Entries are to be done in PeopleSoft under the General Ledger. Be sure there is sufficient budget in the account you are moving expenditures to. If the grants used are not a Research grant, the journal entry will not be routed to the OPM for approval.

Before submitting a journal entry that will be routed to OPM for approval,

  • Make sure that expenses transferred to a grant are allowable, incurred in support of the work covered and funded by the grant during the period of performance of that particular grant
  • Do not move costs from one grant to another for the sole purpose of correcting an overrun
  • An error transaction must be corrected within 45 days for most Federal Sponsored Programs. Cost correction after 45 days may be disallowed and UTD may not be able to recover the funds from the sponsor.
  • For Federal and State grants, do not move general operating expenditures. The department should absorb these expenses.

Please note: Only PAFs can move Effort. No journal entries can be used to complete that process.

Automated Journal Entries (JEs)

Auto JE's are submitted by the Finance department, with approval from OPM if necessary.

All grant Cost Transfers are to clearly indicate how the error occurred, and a certification of the correction of the new charge by the Principal Investigator or the School Dean. "To correct funding or error" is not sufficient as a reason for the Cost Transfer. The justification should contain the period being corrected and a valid reason.

If a PAF changes effort, ECERT must reflect the change as well.

No Cost Transfers of any kind are permitted after the grant's termination date or after the annual reporting date unless it benefits the sponsor (i.e. a transaction is moved off of a sponsored account).

Documentation of cost transfers:

The justification of the cost transfer must include:

  • Benefit to the receiving grant
  • Allowability and Allocability to the grant receiving the cost
  • Reason for transfer (simply putting "to fix error" is not enough)
  • If necessary, the reason why cost transfer is being done past the 45-day window

The justification should allow anyone reviewing the cost transfer to understand how the expense benefits the receiving sponsored project.

The journal entry in PeopleSoft, under the approval tab, keeps track of the workflow of approvals, and time stamp of everyone who signed off on the JE.